Satellite TV service Sky is one of Europe’s leading companies with 23 million customers in Britain, Ireland, Germany, Austria and Italy. It offers internet, phone and TV service. It also owns valuable television channels, including Sky News, Sky Sports and Sky Movies. Sky recently secured rights to the popular Premier League soccer matches.
Sky shares jumped 20% Tuesday after Comcast announced its bid to buy the company. Here is why the heads of Walt Disney, 21st Century Fox and Comcast Corp. all want a piece of Sky:
Rupert Murdoch helped launch Sky in 1989 to take on the venerable British Broadcasting Company. His entertainment company 21st Century Fox owns 39% of the satellite giant. Over the years, Murdoch and his family have tried to buy full control — but they repeatedly have been stymied.
They offered $15 billion in 2016 for full control, and regulators have been chewing on the deal ever since. Regulators worry that the Murdoch family would gain too much control over British media.
How important is Sky to Murdoch? After the Disney deal was announced in December, Murdoch acknowledged to a Sky News journalist that — of the properties slated to go to Disney, including the 20th Century Fox film and television studio — he would be most sad to see Sky go.
Since getting out-manuevered by Disney Chief Executive Bob Iger, Comcast Chairman and Chief Executive Brian Roberts has been looking to get back in the hunt for the 21st Century Fox assets.
He pounced Tuesday as Comcast said it would offer Sky shareholders $31 billion for the satellite TV company.
“We have admired Sky for a long time,” Roberts told investors on a call. He also described a November visit to London, where he was impressed by a cab driver’s enthusiasm for Sky. He asked the cabbie to take him to a nearby mall, where Roberts and a colleague spent an hour learning about Sky’s features and technology.
“Sky has a great record of creating original content in forming exclusive partnerships with top franchises like HBO, the Premier League and Bundesliga,” Roberts said.
Buying Sky would give Comcast a huge boost in its international expansion efforts. It would also provide a prominent distribution system for NBC channels and Universal Pictures and DreamWorks Animation movies.
Adding to its international reach was a key part of Disney Chairman and Chief Executive Bob Iger’s motivation in December to agree to spend $52.4 billion to buy much of Murdoch’s 21st Century Fox.
Iger described Sky as a “crown jewel” of Fox. He said ownership of the service would allow Disney to deliver its television shows and movies, including its rich library of children’s content, to a ready-made audience of European consumers.
International expansion has become increasingly important for companies such as Disney that spend billions each year creating content. These entertainment giants could not support their vast TV and movie studios without international revenue to cover the costs of production and marketing.
Disney saw the Fox acquisition as a way to quickly bulk up to take on Netflix, which has been growing rapidly with strong sales in overseas markets. With Sky, Disney could immediately pick up nearly 23 million subscribers in Europe, a robust market where Disney eventually could introduce streaming services. Disney plans to launch two new digital services in the United States later this year and in 2019.
But Disney does not expect its acquisition of Fox to be approved for at least another year, giving Comcast a window to grab one of the most coveted assets.
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